Sunrise Realty Trust, Inc. Announces Financial Results for Third Quarter 2024

Rhea-AI Summary

Sunrise Realty Trust (NASDAQ:SUNS) reported strong Q3 2024 financial results with GAAP net income of $1.7 million ($0.26 per share) and Distributable Earnings of $1.9 million ($0.27 per share). The company successfully closed $87.4 million in deals and secured a new revolving credit facility with East West Bank, providing an initial $50 million commitment, expandable to $200 million. SUNS paid a Q3 dividend of $0.21 per share and declared a Q4 dividend of $0.42 per share, payable January 15, 2025.

Positive

• Secured new revolving credit facility with $50M initial commitment, expandable to $200M
• Successfully closed $87.4M in deals during Q3
• Strong pipeline of $1.2B in potential deals
• Increased Q4 dividend to $0.42 per share from $0.21 in Q3
• Positive Q3 earnings with $1.7M GAAP net income

Negative

• Q3 dividend distribution ($0.21) was lower than Distributable Earnings ($0.27 per share)

Insights

Financial Analyst

The Q3 2024 results demonstrate solid performance with $1.7M GAAP net income ($0.26/share) and $1.9M Distributable Earnings ($0.27/share). Key highlights include $87.4M in closed deals and a strategic new credit facility with East West Bank providing initial $50M capacity, expandable to $200M. The $1.2B pipeline and increased Q4 dividend to $0.42 signal strong growth trajectory.

The company's conservative dividend payout ratio of 78% ($0.21 distributed vs $0.27 earned) indicates financial prudence while maintaining shareholder returns. The new credit facility's terms (SOFR + 2.75%) are competitive, providing flexibility for portfolio expansion in Southern U.S. markets.

Third quarter 2024 GAAP net income of $1.7 million or $0.26 per basic weighted average common share and Distributable Earnings⁽¹⁾ of $1.9 million or $0.27 per basic weighted average common share

WEST PALM BEACH, Fla., Nov. 07, 2024 (GLOBE NEWSWIRE) -- Sunrise Realty Trust, Inc. (NASDAQ:SUNS) (“SUNS” or the “Company”) today announced its results for the quarter ended September 30, 2024.

SUNS reported generally accepted accounting principles (“GAAP”) net income of $1.7 million or $0.26 per basic weighted average common share and Distributable Earnings of $1.9 million or $0.27 per basic weighted average common share for the third quarter of 2024.

“Our strong performance this quarter highlights the continued momentum we've maintained since our listing as an independent, public company,” said Brian Sedrish, the Company’s Chief Executive Officer. “In the third quarter, we successfully closed $87.4 million in deals, and subsequent to quarter-end, we strengthened our capital structure with a new revolving credit facility with East West Bank, which provides an initial commitment of $50 million and can be expanded to up to $200 million in borrowing capacity. This facility enhances our flexibility to capitalize on our robust $1.2 billion pipeline, positioning us to drive long-term value for our shareholders while expanding our presence in key Southern U.S. states.”

Common Stock Dividend

On October 15, 2024, the Company paid a partial cash dividend of $0.21 per common share for the third quarter of 2024. SUNS distributed $1.5 million in dividends, or $0.21 per common share, compared to Distributable Earnings of $0.27 per basic weighted average common share for such period.

In addition, the Board of Directors previously declared a regular cash dividend of $0.42 per common share for the fourth quarter of 2024, based on visibility into the growth of the Company’s loan portfolio. The dividend is payable on January 15, 2025, to shareholders of record as of December 31, 2024.

New Credit Facility

On November 6, 2024, the Company entered into a senior secured revolving credit facility with East West Bank serving as agent, providing an initial $50 million in borrowing capacity, with the potential to expand up to $200 million subject to available borrowing base and lenders providing additional commitments. The revolving credit facility matures in November 2027 and bears an interest rate of SOFR plus 2.75% per annum, subject to an increase of 0.25% during months where certain conditions are not met and a SOFR floor of 2.63%.

Additional Information

SUNS issued a presentation, titled “Third Quarter 2024 Investor Presentation,” which can be viewed at www.sunriserealtytrust.com under the Investor Relations section. The Company also filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, with the Securities and Exchange Commission on November 7, 2024.

SUNS routinely posts important information for investors on its website, www.sunriserealtytrust.com. The Company intends to use this webpage as a means of disclosing material information, for complying with our disclosure obligations under Regulation FD and to post and update investor presentations and similar materials on a regular basis. SUNS encourages investors, analysts, the media and others interested in SUNS to monitor the Investors section of its website, in addition to following its press releases, SEC filings, public conference calls, presentations, webcasts and other information posted from time to time on the website. To sign-up for email-notifications, please visit the “Email Alerts” section of the website under the “IR Resources” section.

Conference Call & Discussion of Financial Results

SUNS will host a conference call at 10:00 am (Eastern Time) on Thursday, November 7, 2024, to provide an update on the business. All interested parties are welcome to participate. The call will be available through a live audio webcast at the Investor Relations section of SUNS’s website found here: SUNS -- Investor Relations. To participate via telephone, please register in advance at this link. Upon registration, all telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number along with a unique passcode and registrant ID that can be used to access the call. The complete webcast will be archived for 90 days on the Investor Relations section of SUNS’ website.

About Sunrise Realty Trust, Inc.

Sunrise Realty Trust, Inc. (Nasdaq: SUNS) is an institutional commercial real estate lender providing flexible financing solutions to sponsors of commercial real estate located in the Southern United States. We focus on transitional commercial real estate business plans with opportunities for near-term value creation, collateralized by top-tier real property assets in established Southern cities and Southern cities presenting strong growth fundamentals. For additional information regarding the Company, please visit www.sunriserealtytrust.com.

Non-GAAP Metrics

In addition to using certain financial metrics prepared in accordance with GAAP to evaluate our performance, we also use Distributable Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments we believe are not necessarily indicative of our current loan activity and operations. Distributable Earnings is a measure that is not prepared in accordance with GAAP. Distributable Earnings and the other capitalized terms not defined in this section have the meanings ascribed to such terms in our most recently filed quarterly report. We use this non-GAAP financial measure both to explain our results to shareholders and the investment community and in the internal evaluation and management of our businesses. Our management believes that this non-GAAP financial measure and the information they provide are useful to investors since these measures permit investors and shareholders to assess the overall performance of our business using the same tools that our management uses to evaluate our past performance and prospects for future performance.

The determination of Distributable Earnings is substantially similar to the determination of Core Earnings under our Management Agreement, provided that Core Earnings is a component of the calculation of any Incentive Compensation earned under the Management Agreement for the applicable time period, and thus Core Earnings is calculated without giving effect to Incentive Compensation expense, while the calculation of Distributable Earnings account for any Incentive Compensation earned for such time period. We define Distributable Earnings as, for a specified period, the net income (loss) computed in accordance with GAAP, excluding (i) stock-based compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss); provided that Distributable Earnings does not exclude, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) (decrease) increase in provision for current expected credit losses (“CECL”), (v) taxable REIT (as defined below) subsidiary (“TRS”) (income) loss, net of any dividends received from TRS and (vi) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between our Manager and our independent directors and after approval by a majority of such independent directors.

We believe providing Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to shareholders in assessing the overall performance of our business. As a real estate investment trust (“REIT”), we are required to distribute at least 90% of our annual REIT taxable income, subject to certain adjustments, and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of such taxable income. Given these requirements and our belief that dividends are generally one of the principal reasons that shareholders invest in our common stock, we generally intend to attempt to pay dividends to our shareholders in an amount at least equal to such REIT taxable income, if and to the extent authorized by our Board of Directors. Distributable Earnings is one of many factors considered by our Board of Directors in authorizing dividends and, while not a direct measure of net taxable income, over time, the measure can be considered a useful indicator of our dividends.

Distributable Earnings is a non-GAAP financial measure and should not be considered as a substitute for GAAP net income. We caution readers that our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our reported Distributable Earnings may not be comparable to similar measures presented by other REITs.

The following table provides a reconciliation of GAAP Net income to Distributable Earnings:

	Three months ended September 30,				Period from August 28, 2023 to September 30,				Nine months ended September 30,				Period from August 28, 2023 to September 30,
		2024				2023				2024				2023
Net income	$	1,738,363			$	7,767			$	5,014,451			$	7,767
Adjustments to net income:
Stock-based compensation expense		160,139				—				160,139				—
Depreciation and amortization		—				—				—				—
Unrealized (gains) losses, or other non-cash items		—				—				—				—
(Decrease) increase in provision for current expected credit losses		(47,527	)			—				24,327				—
TRS (income) loss		—				—				—				—
One-time events pursuant to changes in GAAP and certain non-cash charges		—				—				—				—
Distributable earnings	$	1,850,975			$	7,767			$	5,198,917			$	7,767
Basic weighted average shares of common stock outstanding		6,800,500				6,889,032				6,800,500				6,889,032
Distributable earnings per basic weighted average share	$	0.27			$	0.00			$	0.76			$	0.00

Forward-Looking Statements

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views and projections with respect to, among other things, future events and financial performance. Words such as “believes,” “expects,” “will,” “intends,” “plans,” “guidance,” “estimates,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements, including statements about our future growth and strategies for such growth, are subject to the inherent uncertainties in predicting future results and conditions and are not guarantees of future performance, conditions or results. Certain factors, including the ability of our manager to locate suitable loan opportunities for us, monitor and actively manage our loan portfolio and implement our investment strategy; the demand for commercial real estate investment; management’s current estimate of expected credit losses and current expected credit loss reserve and other factors could cause actual results and performance to differ materially from those projected in these forward-looking statements. More information on these risks and other potential factors that could affect our business and financial results is included in SUNS’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of SUNS’s Information Statement filed as Exhibit 99.1 to Form 8-K filed on July 3, 2024 and subsequently filed Quarterly Reports on Form 10-Q. New risks and uncertainties arise over time, and it is not possible to predict those events or how they may affect SUNS. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Investor Relations Contact:
Robyn Tannenbaum
(561) 510-2293
ir@sunriserealtytrust.com

Media Contact:
Profile Advisors
Rich Myers & Rachel Goun
347-774-1125
rmyers@profileadvisors.com

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¹ Distributable Earnings is a non-GAAP financial measure. See the “Non-GAAP Metrics” section of this release for a reconciliation of GAAP Net Income to Distributable Earnings.

FAQ

What were Sunrise Realty Trust's (SUNS) Q3 2024 earnings?

Sunrise Realty Trust reported Q3 2024 GAAP net income of $1.7 million ($0.26 per share) and Distributable Earnings of $1.9 million ($0.27 per share).

What is SUNS's new credit facility terms with East West Bank?

SUNS secured a revolving credit facility with East West Bank providing $50 million initial capacity, expandable to $200 million, maturing in November 2027 with an interest rate of SOFR plus 2.75% per annum.

What dividend did SUNS declare for Q4 2024?

SUNS declared a regular cash dividend of $0.42 per common share for Q4 2024, payable on January 15, 2025, to shareholders of record as of December 31, 2024.

How much in deals did SUNS close in Q3 2024?

Sunrise Realty Trust closed $87.4 million in deals during the third quarter of 2024.